Energy efficiency is a key component of climate change policy, and is promoted as a low cost means to reduce greenhouse emissions and reduce peak demand. Energy efficiency is also a key component of the “soft energy path”, originally articulated by Amory Lovins in 1976 in his famous article in Foreign Affairs as a solution to energy supply concerns and declining resources, then later adopted as a solution to climate change.

Such is the power and intuitive appeal of the idea of energy efficiency that it has been almost universally adopted as a key plank of the “sustainability project” by environmental NGOs, green parties, and large sections of Government. Yet Jevon’s Paradox, or the energy efficiency rebound effect, suggests that some, or all, of the gains of energy efficiency are “taken back” in the long-run, and has been passionately debated since the 1980s.

The most common explanation for the failure to reduce energy is that we haven’t tried enough; therefore the solution should be increased regulation and greater stringency, along with greater support for efficiency programs. But a historical examination shows that an improvement in efficiency of Melbourne’s space heating has in fact been sustained and significant, yet energy demand continues to grow. An examination of the specific case of Melbourne’s space heating over a 50-year time-scale provides an opportunity to reconcile the contradiction between the short-run gains from efficiency at a household level, with the irrefutable increase in aggregate energy consumption over the long run. Melbourne’s winter heating is an important case study because the heating load is possibly the single largest peak energy load on any energy source in Australia – the demand on the gas network is regularly 10,000 to 15,000 MW (gas) – so any de-carbonisation plan needs to effectively deal with it.

The paper has two main findings.

The first is that Melbourne’s buildings and heating appliances are much more energy efficient than they were 50 years ago – they’ve shown sustained improvements over a long period, but what we tend to do is “spend” the efficiency dividend – we build bigger homes, we heat larger areas for longer, we have less people living in each home, and so on. The remarkable thing is that we use about the same energy per-person on space heating as we did in 1960, and the trend hasn’t changed much over the ensuing 50 years, even though modern homes are more than ten times as efficient. So the efficiency dividend has given us comfort that our grandparents could only dream about, so that’s a good thing, but if the objective is using efficiency to reduce greenhouse emissions, then it simply hasn’t worked. What has worked in Melbourne has been a shift to natural gas, which has relatively lower greenhouse intensity to other heating fuels.

It’s hard to escape the conclusion that behavioural factors are just as important as technical efficiency, and that the evolution of notions of comfort and sufficiency are themselves intertwined with the improvements in efficiency in buildings and appliances. But of course this isn’t something that governments can legislate for – it’s really about community and social values. In theory, with a cap on emissions, efficiency would permit declining emissions while maintaining consumer utility, but with the unconstrained expansion of emissions, efficiency is as much a part of the problem as the solution. So the conversation, I think, needs to move away from technical efficiency and more towards sufficiency.

The second main finding is that Melbourne’s heating is going to continue to rely on conventional large-scale energy, whether it is gas, or if we convert to electric heat pumps, then conventional dispatchable power. We hear a lot about renewables and smart-grids and electric vehicles plugging in and supporting the grid, and they capture the public’s imagination, but when you look at all of these things carefully, it becomes apparent that they’ll always struggle to move beyond a supplementary role. The reason for this is simple – during winter on cold or near freezing mornings, and in the early evening, people need affordable and reliable heating and this requires large-scale power on demand. Melbourne’s heating season lasts for 4 or 5 months, so you have this need, twice daily, for large scale dispatchable power.

So the paper also highlights the immaturity of the energy and climate debate in Australia – many people assume that Amory Lovins’ “soft energy path” – of efficiency, wind, solar and small-scale distributed power – is the long-term end-point of climate policy, but just how plausible is this pathway, and what have we learnt over the past 36 years? We sort of go round in circles worrying about net versus gross feed-in tariffs for rooftop solar, RECS, and get excited about the prospect of grid-parity and smart grids but these are really second and third order issues. The big picture is baseload, about 80% of our electricity comes from baseload, and during winter, solar is never to have the primary role for heating, wind is intermittent, so as a community, if we actually want to decarbonise, we need to develop some perspective in our policy debates.